Disney’s streaming services — Disney+, Hulu and ESPN+ — have overtaken Netflix in viewership as the Mouse House’s five-year push into the digital streaming space finally comes to fruition.
Disney now has 221 million customers across all its platforms — up from the 220.7 million subscribers Netflix announced in July — after Disney+ added 14.4 million customers in the last quarter ended July 2. it projected to add 10 million customers this quarter.
And as Disney’s dominance continues to grow, analysts expect things could get worse as Netflix struggles to find new viewers.
“Disney is gaining market share while Netflix is struggling to add more subscribers,” Investing.com analyst Haris Anwar told Reuters. “Disney still has room to grow in international markets, where it is rapidly expanding its service and adding new customers.”
Netflix lost 1 million viewers in the second quarter of 2022, its second consecutive decline in viewership.
But regardless of subscriber numbers, Netflix and Disney+ are both raising prices for customers who want to watch their services without ads.
Disney is raising its ad-free monthly cost by 38% to $10.99 a month in December, offering a cheaper alternative option at its current subscription price of $7.99 a month. Meanwhile, Netflix plans to introduce an ad-supported tier by the end of the year after years of rejecting the idea. In January, it raised the price of its basic plan in the US to $9.99 a month, its standard plan to $15.49 a month and its premium plan to $19.99 a month.
Disney shares rose 6.9% to $120.15 in after-hours trading and settled at $112.43 at 7 a.m. ET in premarket trading.
Disney’s five-year push
As viewers drifted away from traditional cable and broadcast TV, in 2017 Disney moved to build a streaming service to challenge Netflix’s dominance in the digital content space. This may interest you : ‘First Kill’ Canceled by Netflix After One Season.
After five years, a pandemic and billions of dollars spent on acquisitions and producing new online content, Disney looked set to meet CEO Bob Chapek’s February forecast of between 230 million and 260 million subscribers by the end of 2024.
However, Disney lowered that forecast on Wednesday’s analyst call to between 215 million and 245 million after lowering its subscriber expectations on its Indian platform Disney+ Hotstar, where the company is losing streaming rights to Indian Premier League cricket matches. Disney CFO Christine McCarthy still stated that the company expects to add 80 million Hotstar customers by September 2024.
Despite the rise in viewership, Disney is still losing money in its streaming business as it spends aggressively on content, marketing and technology infrastructure. While the streaming division’s revenue rose 19% to $5.1 billion, its losses weighed on the media and entertainment unit, whose profits fell 32% to about $1.4 billion.
Netflix’s bad year
Netflix hasn’t had the best year so far. Read also : US and UK property market slowdown risks deeper global economic slump.
Shares of the premium subscription service have fallen 68% year-to-date — the biggest declines in the S&P 500 and Nasdaq 100 indexes — as the company grapples with increased competition, the likelihood of a global recession and the end of the recession. pandemic-driven streaming boom.
Some optimistic investors who believed a turnaround was near and held on to shares of once-prized tech stocks may be starting to lose confidence. Shares of Netflix fell 0.31% to $244.11 in premarket trading at 7 a.m. ET.
And with both streaming providers facing higher inflation, cost-conscious streamers may be forced to opt for “must-have” subscription services.
“Netflix is still the leader in video streaming, but if it doesn’t find more franchises that resonate, it will eventually struggle to stay ahead of competitors chasing its crown,” said Ross Ben, an analyst at market research firm Insider Intelligence, after Netflix. published earnings in July.
Sign up for the Fortune Features email list so you don’t miss out on our biggest features, exclusive interviews and research.
